If you are looking for momentum plays, you may find this list very interesting.

We ran a DuPont analysis of profitability for about 120 of the high-volume gainers on 5/18/11 (that is, stocks rising on relative volume greater than 1.5 - i.e. yesterday's trading volume is 50% or higher relative to the three month average daily volume).

From this analysis, we found 10 companies that passed all requirements for positive sources of return on equity. Here's the final list:

We broke the ROE equation into three parts:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

All of the stocks mentioned below have seen rising ROE values for the recent quarter, year-over-year. Then we wanted to analyze the sources of these returns, so we narrowed down the original universe to only focus on companies with the following characteristics:

5. Herbalife Ltd. (NYSE:HLF): Drug Related Products Industry. Market cap of $3.07B. On 5/18/11 the stock rose 2.46% on relative volume of 1.57. Return on Equity increased from 13.73% to 15.09%. When analyzing the sources of return, Net Profit Margin increased from 8.38% to 11.01%. Sales/Assets increased from 0.5213 to 0.5855, while Assets/Equity decreased from 3.1411 to 2.3402 (comparing 3 mo. ending 3/31/10 vs. 3 mo. ending 3/31/11). The stock might be undervalued at current levels, with a PEG ratio at 0.73, and P/FCF ratio at 11.87.

6. Hollysys Automation Technologies, Ltd (NASDAQ:HOLI): Industrial Electrical Equipment Industry. Market cap of $543.41M. On 5/18/11 the stock rose 1.3% on relative volume of 1.69. Return on Equity increased from 2.49% to 3.70%. When analyzing the sources of return, Net Profit Margin increased from 15.32% to 17.02%. Sales/Assets increased from 0.0937 to 0.1292, while Assets/Equity decreased from 1.7332 to 1.6826 (comparing 3 mo. ending 3/31/10 vs. 3 mo. ending 3/31/11). The stock is a short squeeze candidate, with a short float at 12.14% (equivalent to 8.66 days of average volume).

7. Contango Oil & Gas Co. (NYSEMKT:MCF): Independent Oil & Gas Industry. Market cap of $914.23M. On 5/18/11 the stock rose 4.11% on relative volume of 1.59. Return on Equity increased from 0.45% to 4.11%. When analyzing the sources of return, Net Profit Margin increased from 4.60% to 30.37%. Sales/Assets increased from 0.0644 to 0.0923, while Assets/Equity decreased from 1.5358 to 1.4652 (comparing 3 mo. ending 3/31/10 vs. 3 mo. ending 3/31/11). The stock is a short squeeze candidate, with a short float at 5.99% (equivalent to 7.28 days of average volume).

8. Photronics Inc. (NASDAQ:PLAB): Semiconductor Industry. Market cap of $486.17M. On 5/18/11 the stock rose 5% on relative volume of 1.63. Return on Equity increased from 0.05% to 2.63%. When analyzing the sources of return, Net Profit Margin increased from 0.21% to 10.02%. Sales/Assets increased from 0.1460 to 0.1631, while Assets/Equity decreased from 1.6507 to 1.6089 (comparing 13 weeks ending 1/31/10 vs. 13 weeks ending 1/30/11). The stock is a short squeeze candidate, with a short float at 14.6% (equivalent to 6.27 days of average volume).

9. Textron Inc. (NYSE:TXT): Conglomerates Industry. Market cap of $6.49B. On 5/18/11 the stock rose 0.43% on relative volume of 1.82. Return on Equity increased from -0.28% to 0.95%. When analyzing the sources of return, Net Profit Margin increased from -0.36% to 1.17%. Sales/Assets increased from 0.1220 to 0.1646, while Assets/Equity decreased from 6.3745 to 4.9341 (comparing 3 mo. ending 4/3/10 vs. 3 mo. ending 4/2/11). The stock is a short squeeze candidate, with a short float at 8.4% (equivalent to 6.28 days of average volume). It's been a rough couple of days for the stock, losing 6.09% over the last week.

10. WESCO International Inc. (NYSE:WCC): Industrial Equipment Wholesale Industry. Market cap of $2.28B. On 5/18/11 the stock rose 1.6% on relative volume of 1.82. Return on Equity increased from 1.87% to 3.11%. When analyzing the sources of return, Net Profit Margin increased from 1.67% to 2.61%. Sales/Assets increased from 0.4524 to 0.4848, while Assets/Equity decreased from 2.4718 to 2.4620 (comparing 3 mo. ending 3/31/10 vs. 3 mo. ending 3/31/11). The stock is a short squeeze candidate, with a short float at 14.1% (equivalent to 11.39 days of average volume).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.